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Outlook : a publication of the South Dakota Retirement and Insurance System, March 2014

Outlook : a publication of the South Dakota Retirement and Insurance System. - Page 1

Membership NewsletterMarch 2014
New Laws to Take Effect July 1, 2015
South Dakota Retirement System  1-888-605-SDRS (7377)  www.sdrs.sd.gov
The South Dakota Re􀆟􉽲rement System (SDRS) legisla􀆟􉽯on
proposed by the SDRS Board of Trustees passed
unanimously out of both houses of the Legislature and was
signed into law by Governor Daugaard. Of significance are
new laws pertaining to when a surviving spouse can begin
drawing benefits and the calcula􀆟􉽯on of disability benefits
and certain survivor benefits. These laws will go into effect
July 1, 2015.
Early Surviving Spouse Benefits—Senate Bill 40
Effec􀆟􉽶ve July 1, 2015, the surviving spouse of a member
who died prior to re􀆟􉽲rement may choose to begin
receiving an early surviving spouse benefit prior to
a􀆩􊥡aining age 65. The surviving spouse benefit is a life􀆟􉽭me
benefit with annual cost‐of‐living adjustments that is
currently not available un􀆟􉽬l the surviving spouse a􀆩􊥡ains
age 65.
Structured similarly to the early re􀆟􉽲rement benefit
available to a member, the early surviving spouse benefit
will allow an eligible surviving spouse to draw an actuarially
reduced benefit as early as age 55. The reduc􀆟􉽯on would be
five percent for each full year, prorated monthly, between
the date the benefit begins and the surviving spouse’s 65th
birthday.
For example: A surviving spouse eligible to draw a $1,000
monthly surviving spouse benefit at age 65 may elect to
begin the benefit at age 55. The benefit would be reduced
by 50 percent (10 years x 5 percent from age 55 to age 65).
The monthly benefit payable to the spouse at age 55 would
be $500. While the monthly benefit is lower, the surviving
spouse has access to funds for an addi􀆟􉽯onal ten years. This
example is hypothe􀆟􉽣cal and for illustra􀆟􉽶ve purposes only.
Disability Benefits—Senate Bill 43
Members applying for disability on and a􀅌􄱥er July 1, 2015,
who are approved for benefits will see a more clear‐cut
benefit calcula􀆟􉽯on and a steady, predictable benefit
payment stream.
Under this new structure, a member approved for disability
benefits will receive 25 percent of the member’s final
average compensa􀆟􉽯on at the 􀆟􉽭me of disability or the
unreduced accrued re􀆟􉽲rement benefit at the 􀆟􉽭me of
disability, whichever is greater. The disability benefit would
be payable for as long as the disability may last or for the
member’s life􀆟􉽭me. The disability benefit is calculated at the
􀆟􉽭me of the member’s approved disability and therefore is
only subject to annual cost‐of‐living adjustments as
approved each year by the SDRS Board of Trustees. Any
family or surviving spouse benefit would be based on the
benefit received by the member prior to death.
In addi􀆟􉽯on to disability benefits, certain family and
surviving spouse benefits payable upon the death of an
eligible ac􀆟􉽶ve member whose death occurs on or a􀅌􄱥er July
1, 2015, will also be calculated using this new structure.
This new structure only applies to disability applica􀆟􉽯ons
received on and a􀅌􄱥er July 1, 2015, and to eligible ac􀆟􉽶ve
member deaths on and a􀅌􄱥er that date. Members who
apply for disability or are receiving disability benefits prior
to July 1, 2015, will remain under the law in effect on June
30, 2015. Survivors en􀆟􉽴tled to family and/or surviving
spouse benefits due to the death of a member receiving
disability benefits prior to July 1, 2015, will also remain
under the law in effect on June 30, 2015.
Other Laws to Take Effect July 1, 2014
Correc􀆟􉽯onal Staff Defini􀆟􉽯on (Senate Bill 41): SDRS
re􀆟􉽲rement classifica􀆟􉽯ons will adjust with any changes in
peniten􀆟􉽡ary correc􀆟􉽯onal staff 􀆟􉽴tles.
Op􀆟􉽯onal Lump‐Sum Trustee‐to‐Trustee Transfers Available
to Cement Plant Employees (Senate Bill 42): Allows vested
State employees of the old South Dakota Cement Plant who
are not currently receiving monthly re􀆟􉽲rement benefits the
op􀆟􉽯on to elect a lump‐sum transfer of their designated
re􀆟􉽲rement funds to another qualified re􀆟􉽲rement plan.

Membership NewsletterMarch 2014
New Laws to Take Effect July 1, 2015
South Dakota Retirement System  1-888-605-SDRS (7377)  www.sdrs.sd.gov
The South Dakota Re􀆟􉽲rement System (SDRS) legisla􀆟􉽯on
proposed by the SDRS Board of Trustees passed
unanimously out of both houses of the Legislature and was
signed into law by Governor Daugaard. Of significance are
new laws pertaining to when a surviving spouse can begin
drawing benefits and the calcula􀆟􉽯on of disability benefits
and certain survivor benefits. These laws will go into effect
July 1, 2015.
Early Surviving Spouse Benefits—Senate Bill 40
Effec􀆟􉽶ve July 1, 2015, the surviving spouse of a member
who died prior to re􀆟􉽲rement may choose to begin
receiving an early surviving spouse benefit prior to
a􀆩􊥡aining age 65. The surviving spouse benefit is a life􀆟􉽭me
benefit with annual cost‐of‐living adjustments that is
currently not available un􀆟􉽬l the surviving spouse a􀆩􊥡ains
age 65.
Structured similarly to the early re􀆟􉽲rement benefit
available to a member, the early surviving spouse benefit
will allow an eligible surviving spouse to draw an actuarially
reduced benefit as early as age 55. The reduc􀆟􉽯on would be
five percent for each full year, prorated monthly, between
the date the benefit begins and the surviving spouse’s 65th
birthday.
For example: A surviving spouse eligible to draw a $1,000
monthly surviving spouse benefit at age 65 may elect to
begin the benefit at age 55. The benefit would be reduced
by 50 percent (10 years x 5 percent from age 55 to age 65).
The monthly benefit payable to the spouse at age 55 would
be $500. While the monthly benefit is lower, the surviving
spouse has access to funds for an addi􀆟􉽯onal ten years. This
example is hypothe􀆟􉽣cal and for illustra􀆟􉽶ve purposes only.
Disability Benefits—Senate Bill 43
Members applying for disability on and a􀅌􄱥er July 1, 2015,
who are approved for benefits will see a more clear‐cut
benefit calcula􀆟􉽯on and a steady, predictable benefit
payment stream.
Under this new structure, a member approved for disability
benefits will receive 25 percent of the member’s final
average compensa􀆟􉽯on at the 􀆟􉽭me of disability or the
unreduced accrued re􀆟􉽲rement benefit at the 􀆟􉽭me of
disability, whichever is greater. The disability benefit would
be payable for as long as the disability may last or for the
member’s life􀆟􉽭me. The disability benefit is calculated at the
􀆟􉽭me of the member’s approved disability and therefore is
only subject to annual cost‐of‐living adjustments as
approved each year by the SDRS Board of Trustees. Any
family or surviving spouse benefit would be based on the
benefit received by the member prior to death.
In addi􀆟􉽯on to disability benefits, certain family and
surviving spouse benefits payable upon the death of an
eligible ac􀆟􉽶ve member whose death occurs on or a􀅌􄱥er July
1, 2015, will also be calculated using this new structure.
This new structure only applies to disability applica􀆟􉽯ons
received on and a􀅌􄱥er July 1, 2015, and to eligible ac􀆟􉽶ve
member deaths on and a􀅌􄱥er that date. Members who
apply for disability or are receiving disability benefits prior
to July 1, 2015, will remain under the law in effect on June
30, 2015. Survivors en􀆟􉽴tled to family and/or surviving
spouse benefits due to the death of a member receiving
disability benefits prior to July 1, 2015, will also remain
under the law in effect on June 30, 2015.
Other Laws to Take Effect July 1, 2014
Correc􀆟􉽯onal Staff Defini􀆟􉽯on (Senate Bill 41): SDRS
re􀆟􉽲rement classifica􀆟􉽯ons will adjust with any changes in
peniten􀆟􉽡ary correc􀆟􉽯onal staff 􀆟􉽴tles.
Op􀆟􉽯onal Lump‐Sum Trustee‐to‐Trustee Transfers Available
to Cement Plant Employees (Senate Bill 42): Allows vested
State employees of the old South Dakota Cement Plant who
are not currently receiving monthly re􀆟􉽲rement benefits the
op􀆟􉽯on to elect a lump‐sum transfer of their designated
re􀆟􉽲rement funds to another qualified re􀆟􉽲rement plan.